AOL Pulls Rug From Under 'Magic Carpet'

After coming to a crescendo as key player in Liberty Alliance, AOL has disbanded the Magic Carpet product team and refocused its limited resources on core subscription and advertising businesses. This leaves the Internet giant with no viable alternative to Microsoft's Passport authentication service in implementation, which currently boasts 200 million accounts.

As first reported by BetaNews, Magic Carpet was a unified single sign-on similar in concept to Passport. The system was to provide AOL with leverage to yield against Microsoft, and ostensibly bring forth a rich alternative to AOL's more than 35 million subscribers.

It was in AOL's interest to forge its own path. "If some group outside of AOL becomes the repository of users' digital identities, what has been AOL's vice-grip hold on its users’ online experience is substantially weakened," said Jonathan Eunice, Principal Analyst and IT Advisor of Illuminata.

As Microsoft's Hailstorm -- known by the moniker .Net My Services -- approached, Magic Carpet was to be deployed across the entire spectrum of AOL's partnered sites and internal Web properties. This would have presented a true spoke in Microsoft's strategy to establish its Web services platform.

But recent problems have led AOL to shift its attention back to customers. Major milestones in the company's software development strategy recently went out the door including AOL 8.0 and a corporate IM client.

AOL has faced intense pressure from the Securities and Exchange Commissions, as well as a reshuffling of its top executives. After the fallout hit from the reorganization, Magic Carpet was not the hand of choice, according to the CEO of a Liberty Alliance affiliate who wishes to remain anonymous.

None of the former top team members could be reached at their prospective AOL and Netscape offices, telephone numbers were disconnected, and an AOL operator could not locate several of the individuals in the company directory. A former high-ranking member of the team confirmed the firings and termination of Magic Carpet.

According to sources within the organization, the disbanded Magic Carpet team members were also the AOL point people for the Sun-led Liberty Alliance Project, and played a very active role in its progression.

Liberty Alliance's solution is currently not centralized; meaning sites –- often with conflicting business interests -- must strike bilateral agreements with one another to share a data depository for information. Magic Carpet was a lynchpin in the plot to fill this gap in functionality across an entire array of sites, and would have provided a centralized system were credentials and personalized information tailed users.

AOL presently employs Screen Name across its properties. A handful of partners and vendors have warmed up to the idea, although Screen Name is nearly restricted to AOL's proprietary ISP service and applications such as AIM. A source close to AOL's Screen Name marketing group told BetaNews, "Third parties were hesitant about going down the same path that CDNOW went down by having too much financial exposure to AOL."

The difference between Screen Name and Magic Carpet were the varying attributes that users could bring with them from one site to another. Screen Name is solely an authentication service, and is the precursor of what was to be Magic Carpet – a much richer set of technologies.

With the termination of Magic Carpet, AOL's efforts lie dormant for the time being. However, AOL may continue supporting Liberty Alliance by granting access to its technology.

AOL did not leave itself empty handed. In the spirit of its founders, Liberty Alliance was to be royalty free. Spokesperson Michelle Vance reiterated this point to BetaNews shortly before publication.

Despite that precept, AOL holds five United States patents in each of six specifications published last July. The company has claimed that it will not seek any royalties in the first version of the specifications, but has not decided how it will license future versions nor has it ruled out the possibility.

Sun contends that it will not seek royalties unless another company does so first. This means if AOL decides to collect on its intellectual property, it may have to pay a share of the earnings to Sun.

Single sign-on eliminates the need for multiple passwords, and offers convenience to users of PCs and portable devices as they peruse Web sites and interact with online services. Interested parties include financial services, telecommunications providers, utilities, airlines, manufacturers, government, private organizations and clubs.

Among the most lucrative deals, the United States Federal government is currently seeking a universal sign-on provider to link federal agencies online, potentially dulling out an estimated $500 million.

Microsoft is heavily courting the government, and currently remains the only implemented solution provider on a mass scale. In a surprising move, the Redmond Washington based company is sharing Passport source code with select partners in an effort to make its product more appealing.

AOL spokesperson Andrew Weinstein told BetaNews that the term Magic Carpet was "over arching," by providing a generic name for a variety of technologies. He continued on saying that the company remains committed to developing services built around its users' needs rather than resting on its laurels.

Weinstein claimed that there was no shift in the company's overall strategy, and touted ScreenName partner sites while failing to characterize what Magic Carpet really was meant to be.